Navigating Emotional Challenges in Exit Planning

Fri, 05/26/2023 - 08:00

Written by: JDewing2

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Chasing The American Dream

The United States has always been known as the land of opportunity and new beginnings. For many, families moved to the United States with limited resources and built their own businesses from the ground up. As families grew, family-owned businesses grew with them, establishing community ties and contributing to the economy.  

The American economy is largely supported by family businesses, generating over 78% of jobs and contributing to 58% of the country’s GDP (Hiebert, PhD, CFP). But, what happens when a family business owner can no longer run his or her business at its maximum potential? 

What can you do as a business advisor to convince your potential clients that implementing an Exit Plan benefits both the business and their family? 

This blog post explores a study published by Daniel Hiebert, PhD, CFP which focused on   emotional and psychological factors that contribute to Exit Planning challenges in family businesses, and highlights the importance of involving experienced Exit Planners to ensure successful transitions between families and their businesses. To read the full article, click here: Emotional Attachment and Decision by Family Business-Owners to Seek Help From a Succession Planner.

The Emotional Component: Letting Go of the Business

One significant factor compounding the problem of transition failure lies in the emotional and psychological attachment of business owners to their enterprises. Many owners find it difficult to let go, neglecting the necessary planning for a successful transfer. 

In many cases, the relationship between an owner and their business becomes quite similar to a relationship between a parent and their child. Similarly to a parent nurturing their child up until adulthood, owners often build their firms from a blank slate. 

When it comes time for a parent to send their child to college or into the next chapter of life, attachment anxieties arise. The same argument can be made for owners and their businesses as they grow anxious about a business transfer. 

Furthermore, family relationships intertwine with business management and ownership issues, creating a complex web of emotions and goals that can hinder the planning process and further estate planning. The business becomes intertwined with the individual's identity, making it harder to separate personal and professional aspirations.

Overcoming Emotional Barriers: The Role of Exit Planners

To address the emotional challenges associated with Exit Planning, family business owners must seek the guidance of experienced Exit Planners. These professionals possess a comprehensive understanding of both financial planning along with non-financial goals, allowing them to guide owners through the transition process. 

Research from the article suggests that emotionally attached owners are less likely to seek help from planners, even though their businesses stand to benefit the most from professional guidance.

Key Findings and Challenges:

Various factors contribute to the emotional struggle of letting go and the subsequent planning challenges in family businesses. We’ve highlighted some of these key obstacles below:

  1. Doubt in Successor's Ability: Owners may cling to their businesses due to a lack of confidence in their successors' capabilities to effectively run the company. The fear of potential failure can hinder the planning process. As an advisor, it is your job to facilitate the introduction of a well-equipped candidate. Check out our recent blog, Selecting the Best-Suited Successor to the Business Owner for tips and best practices! 
  2. Family Relationship Turmoil: Turbulence within family relationships, conflicts, and disagreements can complicate the transfer of a family business. Emotional dynamics can overshadow logical decision-making, making it harder to plan for the future.
  3. Heirs Choosing Different Paths: When heirs pursue alternative careers or have no interest in continuing the family business, owners may face significant emotional turmoil. For owners who have counted on their child(ren) taking over when the time comes, whether for trust or legacy reasons, it can be disappointing to have to accept the reality of giving up the day to day work that has driven them for years. Owners may struggle to reconcile their desire to maintain the business with their heirs' divergent aspirations.
  4. Clinging to the Past vs. Embracing the Future: Family business owners who have witnessed their enterprise grow from humble beginnings often find it challenging to detach themselves emotionally from the business. They may view the company as a symbol of their journey, making it harder to embrace change and plan for the future.

The Role of the Exit Planner: An Opportunity to Overcome Emotional Attachments

Exit Planners have a unique opportunity to address the emotional challenges faced by family business owners. Advisors benefit from continuous involvement in the creation of Exit Plans. By understanding the owners' attachment to their businesses, planners can qualify potential clients based on their emotional readiness for succession planning. 

As an advisor, this presents an opportunity to save time and resources, or work with that owner to overcome their attachment. Avoiding Exit Planning Mistakes can be challenging, check out that blog post for tips and resources to become indispensable! 

Additionally, advisors can work with owners to help them overcome emotional barriers, encouraging them to shift their perspective from the past to the future. This approach not only supports successful business transfers but also presents an opportunity for Exit Planners to market their services effectively. 

You can collaborate with your clients to strategize and plan for the future, providing them with insightful recommendations on how to effectively allocate their time and resources. Owners that gradually detach themselves from the business are able to see the big picture, facilitating a smoother business transition.  

The Bottom Line 

Emotional and psychological factors significantly impact Exit Planning in family businesses. Letting go of a business can be an emotional struggle for owners who have dedicated their lives to its growth and success. Owners often shy away from enlisting the help of experienced advisors the more emotionally attached they are to the business. 

Conversely, failing to plan for the eventual exit from can result in loss of business value, resulting in adverse effects on the company culture and value, local economy, and ultimately the personal goals for the owner’s family.

However, involving experienced Exit Planners who understand the intricacies of family dynamics and possess the skills to address emotional challenges can pave the way for a successful transition. By overcoming emotional attachments and embracing the future, family businesses can secure their continuity, contribute to the economy, and preserve their cultural legacy. 

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Navigating Emotional Challenges in Exit Planning

ESOPs In Action and Establishing a Legacy

Fri, 05/12/2023 - 08:00

Written by: JDewing2

What is an ESOP?

Employee Stock Ownership Programs (ESOPs) have become increasingly popular among companies as a way to engage and retain employees while also providing a unique ownership structure. 

This exit path allows employees to own shares in the company they work for, which can result in significant benefits for both the business and the community it serves. 

In this blog post, we’ll explore two examples of ESOPs in action within the Colorado community. 

Benefits of an ESOP: 

The main benefit of an ESOP is that it incentivizes employees to work harder, stay with the company longer, and feel more invested in its success.

ESOP guru and BEI Member, Kelly Finnell had the opportunity to work with Denver Restaurant Group, Edible Beats, to create an ESOP for its employees. 

Kelly and his team at Executive Financial Services  worked to develop an ESOP for Edible Beats Founder, Justin Cucci, and his hard-working team of 325+ employees. Here’s what Kelly and his team were able to accomplish with Edible Beats through the creation and implementation of an ESOP: 

  1. Employee Benefits:  Employees earn shares based on their tenure and salaries. More responsibilities come with a higher salary, and employees in turn get more shares within the company. 

At Edible Beats, every employee regardless of tenure was eligible to be included in the plan. According to Founder, Justin Cucci, new employees must wait a year from the start of employment in order to get vested, and will earn 25% of their shares each year after.  

  1. Improved Retention: ESOPs are a powerful tool for employee retention. When employees feel like they have a stake in the success of the company, they are more likely to stay with the business for the long-term. This reduces turnover costs and ensures that the company retains valuable talent.
  2. Increased Motivation: ESOPs can be a powerful motivator for employees. When employees own a piece of the company, they are more likely to take ownership of their work and feel more invested in the success of the business.

Cucci spoke about how life changing it can be to own shares in a company. Equity provided from shares can assist in purchasing a home or a business down the road. 

“The only thing the shares can't do is be transferred or sold to another person. Shareholders who want to disinvest must sell their shares back to Edible Beats”, wrote Linnea Covington.

  1. Heightened Productivity: Companies with ESOPs often see an increase in productivity. This is because employees feel more motivated to work harder, are more invested in the company's success, and have a greater sense of ownership.

“For Cucci, creating the ESOP means he doesn't have to sell off Edible Beats in pieces, or to an owner who may dismantle the business that he built so carefully. Eventually, the idea is to have the Edible Beats restaurants completely employee owned.” 

For more details on Edible Beats and their recent ESOP strategy, check out this article from Restaurant Hospitality written by Linnea Covington: Denver Restaurant Group Offers Stock To Employees.

Building a Sense of Community: 

So, how does an ESOP positively impact the community? Let’s take a look at a long time Colorado favorite, Beau Jo’s Pizza. 

Chip Bair, the owner and founder of Beau Jo's pizza restaurant in Idaho Springs, announced at the 50th anniversary celebration that he’ll be selling the business to his employees through an Employee Stock Ownership Plan (ESOP). 

As a Colorado institution that’s served approximately three million pies over the years, Beau Jo’s move to an ESOP will ensure that the business will remain in the hands of employees who have helped make it a success over the years. 

This move demonstrates Bair's commitment to the community and his employees who have helped make Beau Jo's a beloved institution over the past half-century. Here’s how: 

  1. Community Involvement: ESOPs provide local employment opportunities to community members and support the local economy. Idaho Springs, CO, has faced an economic downturn as mines across town shut down over the years. Luckily, the newly employee owned pizza joint also calls Idaho Springs home and has been able to provide jobs for many that lost their jobs of the years, establishing Beau Jo’s as a pillar in the community. 

In an article published by Jason Blevins for The Colorado Sun on Employee Ownership and Creating a Legacy, Jason wrote about an Idaho Springs Local, “Alex Dunn worked at Beau Jo’s during college and in the summers when she was a teacher. She started working full-time at the Idaho Springs restaurant 17 years ago and now she is the general manager.” 

Leaving a Lasting Legacy

In addition to the benefits mentioned above, ESOPs are also a valuable tool for building a lasting legacy. ESOPs can help to paint the picture about: 

  1. Long-Term Perspective: When employees own a piece of the company, they tend to take a longer-term perspective. This means that decisions are made with the future in mind, rather than just short-term gains.
  2. Succession Planning: ESOPs can be an effective way to facilitate succession planning. By gradually selling shares to employees, business owners can ensure that the company stays in the hands of those who are committed to its success.
  3. Increased Value: Companies with ESOPs tend to be more valuable, as they have a committed and motivated workforce. This can result in higher profits, which can be reinvested in the business, the community, or other initiatives that support the company's long-term success.

The Bottom Line

An ESOP can provide significant benefits for both the business and the community it serves. They can improve employee retention, motivation, and productivity, while also stimulating economic growth and community involvement. Additionally, ESOPs are a valuable tool for building a lasting legacy.


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Employee Stock Ownership Plan (ESOP)

Be Proactive: Avoiding Exit Planning Mistakes

Fri, 04/21/2023 - 08:00

Written by: JDewing2

The foundation of an Exit Plan relies on extensive planning and solid implementation. At the cornerstone of a functional Exit Plan, your job as the business advisor is to guide the business owner so that the business can live on after the owner exits. 

For small-business owners, retirement planning is not as simple as saving a certain amount of money in a retirement account. A significant part of retirement planning is Exit Planning, which involves creating a strategy to transition out of the business while maximizing its value. 

So, what can you do to set your client up for success when exiting their business? First and foremost, you should help your client create a timeline for the exit process. This timeline should include both short-term and long-term goals, such as:

  • When the owner plans to retire 
  • How long it will take to transition out of the business 
  • When the new owner will take over

Additionally, you as the advisor should help your client establish a plan for handing off the business to a chosen successor. This plan should include an:

  • Overview of the business 
  • Organized financial review
  • Assessment of the business’s strengths and weaknesses. 

Next, you should help your client review their financial documents, such as their balance sheets, cash flows, and income statements, to ensure that they are up-to-date and accurate. With the right planning and guidance, your client can successfully transition out of their business and maximize its value.

Guiding your business-owning client throughout the Exit Planning Process is essential to a successful exit. Due to differing business exit strategies, many business owners fail to plan for the exit of their business, or make mistakes when planning their exit strategy. 

In this blog post, we will discuss tips to overcome the most common mistakes small-business owners make when planning their exit strategy. 

Tip 1: Proactivity is Key

Many small-business owners start planning their exit strategy when they are already close to retirement age. However, Exit Planning should start long before retirement. Business owners should invest in building a strong culture, optimizing processes, and building revenue from day one. This will not only make it easier to leave when the time comes, but it will also make the business more valuable to potential buyers.

It is important for business owners to assess how well a potential hire's values and work ethic align with their own during the recruitment process. Generous training, pay, and benefits can also show hard-working employees appreciation and create a healthy culture. This is especially true for key employees as they are an integral part of the value drivers for the business.

Streamlining operational aspects of the business can help increase the value of the business to potential buyers. Business owners should also work on expanding their product or service offerings or increasing the markets in which they do business to create a diversified revenue stream. In a previous blog post, we dive into Proactive Business Advising.

Tip 2: Identify a Business Successor

Selling a company is not the only way to exit the business and retire. Business owners should consider having a trusted business partner or family member take over the day-to-day operations of the business. This can help create a family legacy and ease the transition for the business owner, which can satisfy the non-financial goals of many business owners. 

However, it is important to make this plan clear well before retirement to allow time to train and coordinate with the successor. Check out our blog post for helpful tips on Selecting the Best-Suited Successor to the Business Owner!

Tip 3: Become Indispensable

Building a business model around oneself as the central component can delay retirement and make it harder to transition the business to someone else. Business owners should empower others to take their place as often as possible. This could include being more of a mentor than a boss, memorializing policies and procedures, and delegating tasks appropriately. If the majority of the business value is with the owner directly through knowledge and client relationships, the business itself won’t be valuable to another owner.

The Bottom Line

In conclusion, it is never too early for your clients to plan for a business exit. Developing a plan to transition out of the business doesn't have to be a stressful process. It is important to make sure that the successor is properly trained and given time to adjust to the new role. 

Additionally, business owners should become more of a mentor to empower others to take their place and should document policies and procedures to make the transition easier. Planning for retirement may seem daunting, but it is essential for the future of the business. By avoiding these common mistakes, small-business owners can maximize the value of their business and ensure a smooth transition out of the business when the time comes.

Help your clients create  an internal transition team to help with the process. The team should include members from different areas such as finance, operations, and marketing. This team can help to identify any areas of the business that need to be addressed prior to the transition. 

Furthermore, create a timeline for the transition and create a list of goals that need to be achieved to share with the advisor team. With clarity around the goals and expectations of each member, you'll ensure that your client’s transition out of business is as smooth and successful as possible.

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Being Proactive is Key to Avoiding Exit Planning Mistakes

Exit Planning as an Advisor's Next Great Adventure

Mon, 02/06/2023 - 08:00

Written by: mernzen

In the BEI Seven Step Exit Planning Process, the crucial first task is to determine an owner’s post-exit objectives. The value-based goals that a business owner seeks at the time of their transition is ultimately what shapes and guides the comprehensive Exit Plan. 

During this stage, we often suggest that advisors pose the question: “What’s next?”  

Encouraging business owners to look past the day-to-day reality they have been living since the inception of their business is no small feat. However, it is crucial to engage in discussions regarding your clients’ desired lifestyle post-exit in order to determine the necessary steps for achieving their goals. 

For some owners, they just want to be able to live a financially sustainable lifestyle and spend more time with their grandkids. For others, they want to leave an impactful legacy within their community or take on a new business venture. As you’ve spent countless conversations asking clients what their next great adventure entails, have you flipped the script and asked yourself the same question? 

Can Exit Planning be your next great adventure? 

Considering Exit Planning Services 

Exit Planning is a learned skill set requiring training and many years of continued education. This means that those who are introduced to Exit Planning have likely spent many years in another profession or speciality. At BEI, we hear from various professional advisors such as CPAs, attorneys, financial advisors, business consultants, and others who seek a change of pace or a way to differentiate their practice.

We’ve also heard from business owners themselves who have their own stories and experiences exiting their businesses who wish they had more Exit Planning knowledge at the the time of their own business exit. 

Whether you are looking to broaden your core services, stand out from competitors, or to help owners avoid the mistakes you have made, there are several reasons why Exit Planning could be the perfect fit for you. Exit Planning is about creating and maximizing value in a business to be sold for the highest sale price. It’s separate from retirement or succession planning, and many business owners - 80% according to the 2022 BEI Business Owner Survey -  lack a formal, written Exit Plan. 

Exit Planning presents a huge opportunity in an expanding market, making it a valuable addition to your career. However, as with any new venture, it’s important to consider the risks and rewards. Below, we’ve outlined four considerations BEI views as rewards to Exit Planning and how you can make this venture worthwhile.  

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Authority Positioning 

According to Forbes, “Authority positioning is one of the top ways in modern marketing to build recognition for yourself, your company, and your brand.” Using authority positioning tactics allows you to show off your expertise to both current customers and the prospects you are working to convert. 

While there are several ways to establish authority and credibility, Exit Planning expertise can be highlighted in a variety of ways. Due to the sheer amount of time invested to become an Exit Planning Advisor, it’s an accomplishment worth highlighting. 

One way to get started with authority positioning is to write content that focuses on Exit Planning for business owners. Whether in the form of blogs, social media, e-newsletters, videos, or something else, you will show potential clients that you have the knowledge and expertise to help them with their Exit Planning needs. 

To further establish your authority in Exit Planning, consider hosting webinars or giving talks sharing your expertise. Sharing your knowledge, whether by presentation, podcast, or in writing, helps further your status as an expert in Exit Planning. 

Be the Quarterback vs. the Coach 

For professional advisors who particularly enjoy the “personal” side of business, Exit Planning may be just the addition you need to mix up your work routine. The comprehensive nature of Exit Planning requires that the advisors take more of a quarterback role as opposed to a coach. 

While there are certainly many instances that will require you to step in and provide resources and knowledge based on your background, you will also manage the creation and execution of the Exit Plan. Further, it will be up to the Exit Planning Advisor to manage the Advisor Team and take that pressure off of business owners. 

For a few professionals, transitioning from a specialist to a more generalized role and assuming the added responsibility of managing tasks and advisors in an Exit Plan can be a significant change of pace.

Increased Revenue & Clients 

Don't let the thought of Exit Planning being time-consuming deter you as an advisor. You may be pleasantly surprised by how it can be integrated into your current work easily. No matter your area of specialization, with the right strategies and tools, Exit Planning can bring significant added value to your services.

Similar to authority positioning, credibility can go a long way when it comes to securing a new client or obtaining a referral. While building a credible reputation may take time, once clients and peers recognize you as an Exit Planning expert, doors begin to open.  

Stand Out Among Competitors

In a saturated business market, owners have a lot of options on who to hire to help them with their needs. Exit Planning is oftentimes a need that owners aren’t even aware of yet or don’t know how to get started. Owners may start with a narrow lens, which means they’ll rely on education and recommendations from trusted sources about what Exit Planning is and why it’s important for them and their business.

While adding Exit Planning services to your practice might not be enough to differentiate on its own, finding new and innovative ways to market this service can be an advantageous opportunity for you as an advisor.

The Bottom Line 

It’s likely that in your professional life as an advisor, you are used to focusing on your clients and what their “next great adventure” is. However, it’s worth considering how you can enhance your professional life by becoming a Certified Exit Planning Advisor.

At BEI, we want to hear what your goals are. Schedule a meeting with us at the link below to get started.


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Exit Planning as an Advisor's Next Great Adventure

Navigating Exit Planning Fees: Strategies & Tips for Advisors

Fri, 01/27/2023 - 08:00

Written by: mernzen

For over 25 years, BEI has been dedicated to assisting advisors in strengthening their connections with business-owning clients and providing the necessary tools to help reach their goals.

The BEI team frequently engages in conversations with professional advisors, exploring how incorporating Exit Planning can enhance their core offerings, differentiate them from competitors, and provide a new way to approach clients. However, despite the benefits of Exit Planning, many advisors struggle with the question of how to properly charge for these services and come to us for guidance.

Navigating the complexities of fee structures can be challenging, particularly in the Exit Planning space where different pricing strategies are prevalent. Many advisors may find it difficult to decide on the most appropriate method and how it will be received by clients and prospects.

Pricing Strategies 

Over the years, we have observed a diverse range of fee structures used by advisors within the BEI Network. Some advisors choose to align their Exit Planning strategy with their existing fee schedule for other services offered in their practice, while others opt for a unique approach. To assist advisors in this process, we have compiled a list of some of the most commonly used fee methods:

  • The All-In Strategy

Completing one specific aspect of an Exit Plan, such as creating Business Continuity Instructions or a Value Driver Report would qualify for this method. This approach is often used for charging on a project basis or for business owners who are still far from their exit date.

  • The 50-50 Strategy 

This fee method involves collecting 50% of the fee upfront and the rest upon completion of the project. Alternatively, this method could be implemented by billing 33% of the fee every month for a three-month period or 25% of the fee for four months. 

  • Retainer Strategy 

The advisor and the business owner come to a mutual agreement on a fixed monthly fee for a specific duration, typically on an annual basis.

  • The Phase-Creation Strategy

This method involves breaking the Exit Plan creation and the implementation process into multiple “phases,” and the business owner would pay as you enter and complete each phase.  

  • The Hybrid-Pricing Strategy 

This approach asks for a sum up front (e.g., 25% of the proposed total fee), and then the balance is on a retainer agreement. 

  • Hourly Pricing Strategy 

While project billing has a higher perceived value in the mind of the business owner, many advisors are more comfortable charging an hourly fee as they do with their existing practice work.

  • Bonus Ideas on Pricing Strategy 

An Exit Planning Advisor could offer the business owner a “credit” of the Exit Planning fees towards any fees they would get as a result of their effort. You also have the option to add a “success fee” as a percentage of the selling price onto your Exit Planning fee. 

Selecting the Right Strategy 

While the above list provides common strategies from the BEI Network of advisors, it is by no means a comprehensive list. At the 2022 BEI National Conference in a session titled, “Recipes for Success: Pricing Strategies,” attendees heard four different takes on pricing based on each presenter’s practice specialty and preference. 

Terry Staley, CPA with MarksNelson, offered his informal method to charging fees: The estimated total cost of the comprehensive Exit Plan is given using the BEI fee estimator tool, which typically falls within the $30,000 range based on his location and clientele.

His team then charges consultative fees by the hour as they complete different phases of the plan. In Terry’s opinion, “If you bring excellent service and provide a tangible value, you can charge what you feel is fair, whatever that might be.” 

At the end of this session and along those same lines, BEI Founder John Brown posed the quote: “Value-based pricing is customer-focused, meaning that it is done based on how much the customer believes the planning is worth.” 

Whichever strategy you decide best suits your practice, it is key to find a satisfactory pricing strategy that ultimately provides value to your clients. 

Business Owner Feedback to Fees

Regardless of your chosen pricing method, how do you manage fee aversion from your clients? 

  1. Be transparent. Being honest about what exactly an owner is getting and what deliverables are included in the engagement letter or other signed agreements helps to manage client expectations. 
  2. Research your audience. As with any aspects of consulting or advisory services, knowing your target audience is key to proposing an appropriate fee. Considering geographic location, business size, and annual revenue, among many things, can help determine an applicable, yet competitive strategy. 
  3. Understand their resistance. While you have justifications for your method of charging fees, it’s helpful to keep in mind why each client might prefer one strategy vs. another. It may be that having a monthly retainer helps keep the owner accountable for Exit Planning tasks, or they might appreciate paying per project if their timeline spans several years. 

Pose Your Price as an Investment 

Understand & Articulate Your Value

What is more important than the actual fees you charge is the relationship that you are building and forming with your clients. Your unique value proposition as an Exit Planning Advisor is to help your owner clients get out of their business when they want, with the money they need, transitioning to whom they want. 

Therefore, it isn’t about justifying a price for the amount of work you will do, it is about allowing the business owner to place a value on the benefits they receive. You are selling a solution. 

Put the Price in Perspective for Your Client 

Simply put, if you are saving or making your client money, there will be no need to justify your fees. But, providing excellent service, tax savings, improved cash flow, higher price of sale, etc. sometimes still does not add up for them. 

It may be helpful to relate your cost to a common expense in order to give perspective. “The cost I am proposing for your comprehensive Exit Plan is less than the salary of your personal assistant or office cleaning staff.” 

Or, you could also relate your fees to your client’s revenues: “The investment of $15,000 for your Exit Plan is only one half of 1% of your gross revenues.” 

Every business owner has a different mindset, but posing your price as an investment helps to promote peace of mind as they prepare for the transition of their business. 

BEI Tools 

Due to the complex nature of charging fees, BEI offers several tools to Members to assist with this undertaking. 

BEI Fee Estimator Tool 

This tool is a 10-question assessment that generates a proposed fee based on the answers. Once you input information (i.e, company's gross revenue, number of employees, etc.), the tool suggests a fee based on the complexity of the recommended Exit Plan.  This tool provides the total proposed for the complete, comprehensive Exit Plan. It is then up to you as the advisor to come up with a strategy that works for both you and your client, as well as determine additional fees for implementation based on your client’s needs. 

Engagement Proposal Letter 

Sending a formal, detailed proposal letter is an important factor in engaging and retaining clients. Using this tool to map out all that you will be providing is crucial in your client understanding what they are paying for. BEI has several templates created that you can customize for each client based on what deliverables you plan to offer. 

EPIC Recommendations:

Lastly, BEI Members with a Planning or Full License are familiar with the outputs received using the EPIC software. Each recommendation is based on a values-based goal of the business owner and can be used as line-item deliverables within your engagement proposal letter. 

To schedule a meeting with a member of the BEI team to discuss these tools further or to schedule a live demo of the planning software, follow the link below! 


Schedule a Meeting


In the end, not having a plan in place can be far more costly for a business owner than the fee you might charge.  A Forbes article addressing business owners said, “Developing and putting into action an Exit Plan sounds like a lot of work, and it can be. However, you only get to sell each company you own once, so developing a plan is essential to get you more money for your investment and hard work.”

With the understanding that you, as the Exit Planning Advisor, are ensuring an owner’s peace of mind, remember the following points about fees: 

  • There is not an “incorrect” method to charging fees. If the strategy works for your practice and your clients are willing to pay it, great! 
  • By using the tips of transparency, audience research, and owner-specific considerations, you are better positioned to avoid fee-aversion. 
  • Know your value as an advisor. You are providing an important service with significant ROI - business owners need your expertise!  
  • Keep your client in mind and be able to rationalize and reason with them to find a fee structure that is mutually beneficial. 

navigating exit planning fees

Proactive or Passive: What Kind of Advisor Are You?

Fri, 01/13/2023 - 08:00

Written by: mernzen

We find that professional advisors typically read this blog for two purposes. They want to:

1.     Grow and perhaps redirect their practices to focus on representing business owners.

2.     Improve their ability to help owners increase and preserve the value of their companies and eventually exit them on their terms.

Many advisors haven’t been able to accomplish either for a variety of reasons. One which they may not have considered: advisor passivity when confronted with owner passivity.

Most owners simply don’t spend the time or the money necessary to take action to position their businesses and themselves to exit successfully. Instead, they respond to the idea of business Exit Planning with some variation of:

·       “How can I drain the swamp when I’m up to my ears in alligators?”

·       “My company is worth more than enough, so I can exit whenever I want!”

·       “I can never exit because the business can’t run without me.” 

These owners seldom initiate planning or take action aimed at exiting successfully.

It’s clear that most will not approach you to talk about Exit Planning. So, what can you do if you want to use your expertise in Exit Planning to grow your practice and/or improve your ability to help your clients execute the most important financial event of their lives?

Be proactive.


Defining Proactive

Asking owners about their plans to exit “someday” is not proactive. Taking responsibility for helping owners achieve their goals through a successful business exit is.

Being proactive is not being pushy or obnoxious, rather, it is recognizing your responsibility to make forward progression in the best interests of your clients. Since most owners don’t take steps to prepare for their business exits in a timely fashion, we need to encourage, support, and guide them.

How do you take initiative in a way that demonstrates to owners that you are working in their best interest? How do we convert some-day-but-not-today owners into Exit Planning clients?

Consider the advice of architect and inventor, Buckminster Fuller.

“If you want to teach people [owners] a new way of thinking [about exiting], don't bother trying to teach them. Instead give them a tool, the use of which will lead to new ways of thinking."

--Buckminster Fuller


What’s in your Toolbox?

What tools can you give owners to lead them to a new way of thinking and acting about leaving their businesses?

First, become knowledgeable in a proven planning process that optimizes owners’ odds of reaching their exit goals:

Goal 1:  Leaving their companies when they want

Goal 2:  Leaving their companies with the money they want

Goal 3:  Putting their companies in the hands of the successor(s) they choose.

Second, tell owners about the benefits of this process and your willingness to share your expertise. Suggest that you begin by simply understanding their goals and the types of exit strategies that might work best for them. Offer to assess the financial resources they currently have and determine what must be done to close any financial or other gap that would prevent them from exiting on their terms. 

Let’s say you are working with an owner and you determine that there’s a $2 million gap between the resources they want (or need) to live the post-exit life they desire, and the resources they will likely have on the date they want to exit. To address this gap, you can introduce them to the tools you can use to motivate members of their management to grow the value of their company at the pace needed to close that gap.

BEI has an assessment tool that quickly and easily identifies an owner’s chief concerns and tools to address and resolve those concerns. In addition,  BEI’s planning software contains dozens of recommendations that advisors can customize and use to address their clients’ specific Exit Planning goals. One example is to create a non-qualified deferred compensation plan, another is to consider a stock purchase or stock bonus plan. Further, BEI provides training on when and why to make each recommendation.


Passive or Proactive?

There is no reason for you to wait until your clients and prospective owner-clients think they have the time or money or need to begin planning their business exits.

  • Exit planning isn’t a “some-day-but-not-today” issue. As Members of BEI’s Network of Exit Planning Advisors  know, without a plan in place, few owners will achieve the three fundamental ownership goals of leaving their companies:
    1. when they want,
    2. for the money they want and
    3. in the hands of the successor(s) they choose—much less other goals they may have for themselves, their family members and companies.
  • Unlike owners who don’t know how to reach their goals, trained Exit Planning Advisors have a toolbox full of strategies they can use for that purpose.

Passive advisors wait, and wait, and wait for owners to approach them and ask for help orchestrating their business exits. Proactive advisors equip themselves with the tools they need to reach out and help their clients and then put those tools to work.


The Bottom Line

Skilled Exit Planning Advisors live in a different world and have varying priorities than advisors who lack this expertise. Without knowing whether an owner wants to exit this Friday or 10 years from now, Exit Planning Advisors educate owners about the benefits of Exit Planning and their ability to design successful Exit Plans. 

You can do the same. 

You can use Exit Planning to grow your practice and make a meaningful difference in the lives of your business owner clients by helping them increase and preserve the value of their companies and eventually exit them on their terms.

One tip to being a proactive advisor is to stay up to date with current trends and market updates. Check out the latest BEI Business Owner Survey to familiarize yourself with the takeaways and share insights with your clients and prospects.
Download the 2022 BEI Business Owner Survey

Be a Proactive Advisor